February 2024 Monthly Commentary
Welcome to the world of finance where we witnessed a remarkable show as US stocks rallied to close out February on a high note. Both the S&P 500 and Nasdaq Composite delivered their best February performances since 2015, leaving investors feeling optimistic about the market's direction. It's like they were a pair of synchronized swimmers, gracefully gliding through the waters of the market, leaving spectators in awe. The Nasdaq Composite achieved a record-breaking close, finishing at its highest point ever of 16,091.92. The S&P 500 also reached a new record high of 5,095.88.
But hold on to your hats because we have some spicy news for you! The latest consumer price index data came in hotter than a jalapeño in a salsa contest. The headline CPI ticked up by a sizzling 0.3 percent, while core CPI, which excludes the wild swings of food and energy costs, rose by a blazing 0.4 percent. This unexpected heat wave had the market sweating buckets, as it priced out a potential rate cut from the Federal Reserve in March and cast serious doubts on a cut in May. Inflation has once again emerged as the true antagonist in our financial narrative. Like a cunning pickpocket, inflation lurks in the shadows, influencing the Fed's every move.
Amidst this financial spectacle, Nvidia took center stage with its outstanding earnings that exceeded all expectations. The market felt the impact of Nvidia's success, akin to the awe-inspiring display of fireworks on the Fourth of July. However, this is not a solo act as we’re already starting to see signs of the market broadening out, even beyond The Magnificent Seven. Other sector components, such as biotech and gene therapy, are stepping into the spotlight and showcasing their own growth and innovation.
On the global stage, geopolitical tensions have added an extra layer of uncertainty. Conflicts in Europe, the Middle East, and Asia will continue to keep investors guessing. While the market hasn't immediately reacted to these events, their impact may eventually ripple through the financial landscape.
In the world of investing, certain recurring themes have dictated performance recently: tight labor markets and wage growth, the ebb and flow of inflation, the influence of monetary policy, the resilience of economies, and the ever-present geopolitical tensions. As investors, it's crucial to remain adaptable and nimble in this ever-evolving environment, especially considering the dominance and inflated valuations of some large-cap stocks.
When thinking about portfolios, remember not to be swayed by size alone. While small-cap stocks may have taken a backseat to their larger counterparts this past year, they possess unique advantages. Smaller companies are often more nimble and able to adapt quickly to changing market conditions. They can make strategic decisions and implement new ideas more efficiently, giving them a competitive edge in dynamic industries. This ability can translate into higher growth rates and potentially better investment returns. And let's not forget the allure of non-U.S. small caps, offering increased diversification at discounted prices. It's like discovering a hidden treasure trove of investment opportunities in the vast global market.
So, my esteemed audience, in this grand financial theater, always remember that it's a small world after all. Stay informed, stay witty, and enjoy the captivating performance that is the world of finance!
Onward, and Upwards, Always!
Steven and Daniel
The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
Past performance is not a guarantee of future results.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation.
One cannot invest directly in an index.
The MSCI is an index of stocks compiled by Morgan Stanley Capital International. The index consists of more than 1,000 companies in 22 developed markets.
Bitcoin and other cryptocurrencies are a very speculative investment and involves a high degree of risk. Investors must have the financial ability, sophistication/experience, and willingness to bear the risks of an investment, and a potential total loss of their investment.
Any opinions are those of Steven Schmitt & Daniel Mar and not- necessarily those of Raymond James.
